6 - TAX (fin) Flashcards
Types of tax
VAT
- businesses generally add VAT onto the prices they charge (tho could elect not to and pay themselves)
- charges on most goods and servs in UK and some that are imported
Stamp duty
- charges on paper based transfers between investors (shares 4 £)
SDRT
- charged on most holdings held in dematerialized form
SDLT
Tax paid on purchase of land in UK and NI
PERSONAL
CGT
- tax on profit on disposal of an asset
IHT
- tax on the estate of someone who has died (payable on 6m after death
Income tax
- tax paid on earnings
Statutory residency tests - automatic overseas
Automatic overseas
- UK res 1/more of last 3 tax years and <16 days in UK in current tax year
- not UK res for last 3y and <46 days in UK current
- work full time abroad and <91 days in UK and <31 days working in UK
Automatic UK - residency
- in UK at least183 days of tax year
- home in UK and pres for at least 30 days (must have had home >91 consecutive days) + pres in overseas home <30 days
- work full time in UK for period of 365 days with >75% of days worked >3hrs in UK
Sufficient ties test - residency
If indiv meets neither auto test reqs
Family tie - civil partner/spouse/minor children liv in UK (time spent with minor children ignored if <61 days)
Accommodation tie - accom avail to use for continuous period of >90 days in tax year and 1 night spent
Work tie - work in UK >3hrs/day for at least 40 days/year
90 day tie - spent >90 days in UK in either of last 2 tax years
Country tie (leavers only) - spend more days in UK than any other country
Number of days spent in UK determines no of ties required to be resi for tax purposes
residency vs domicile
Tax residency = ST concept, determined separately for each tax year, broadly reflects where you reside
Domicile = more LT, country that you consider to be your permanent home
UK dom/deemed dom = liable for IHT on worldwide assets
non UK dom = only liable to IHT on UK assets ( not gilts, unit trusts and OEICs if non dom)
Formerly domiciled resident - deemed domicile
From April 2017 - to stop people establishing non domicality for IHT pre dead and then returning to the UK
Formerly dom resi =
- born in UK
- domi of origin UK
- resi in UK for this tax year and at least one of two immediately preceding tax years
OR UK res for 15/2- last tax years
Res non dom tax (if no remittance basis claimed
No UK tax if foreign income <£2k and not transferred to UK
If inc >£2k, or any remitted to UK - pay UK tax on WW income
May be able to claim back - DTA
OR CLAIM REMITTANCE BASIS
Investment bonds
– designed as wrapper to hold series of CIS (usually tho choice is now widening)
- lump sum investment into life assurance prod (so not qualifying and will be tax to pay eventually, tho deferred)
- designed as wrapper to hold investments
-Tiny amount of life cover - typically pays out 101% of value on death
- subject to income tax not CGT
- up to 5% of initial investmemnt amount can be withdrawn a year on (higher rate= onshore) tax deferred basis (cumulative so after 4.5y can take 25%)
- - onshore bonds suffer tax @ 20% internally (not redeemable for non taxpayers)
- offshore bonds = no internal tax
- tax payable on chargeable event
- neither is tax free just tax deferred (onshore HR tax deferred)
- if you do non permissable withdrawal (take >5%), tax @ marginal rate on excess
- mostly written as whole life policies so investment period is open (may be single or joint life)
- joint life benefit = bond can continue throughout lifetime of spouse
- all non quali
- can add children/grandchildren as life assureds to prevent auro encashment on death of holder in time of poor fiscal/market conditions
- can issue in segments and assign to low tax paying individuals
- can issue on capital redemption basis - so only comes to auto end after set term normally 99 years
- have 5% pa tax deferred, cumulative withdrawal facility
Chargeable event investment bonds
DAMES
Death
Assignment for money’s worth (not gifting)
Maturity (some have limited lifespans)
Excess partial surrenders (over % per annum cumulative facility, taxed immediately on excess)
Surrender (back to insurance company)
Tax of investment bonds
GTI
G = GAIN = CALC THE CHARGEABLE GAIN
= amount received from assignment/surrender - total premiums paid+ permissible withdrawals
(CHECK WITHDRAWALS ARE UNDER 5%) + to income to check tax rate
T = TOP SLICING RELIEF
- on full surrender, chargeable gain can be divided by no. of complete years policy has been in force (round down partial years)
I = INCOME
Add the slice to the other income received in the year of surrender + tax as usual utilizing allowances - Taxed as SAVINGS INCOME
Work out tax due on slice (deducting 20% for offshore bond taxed @ source)
Multiply by number of complete years
People can time surrender to make use of avail BRB or PSA (e.g. low income year, big pension contribution, living on TFC)
Offshore vs onshore bonds
Offshore bonds
- tax efficient wrapper
- sales within bond free of CGT
- charges tend to be slightly higher than onshore
- also non quali
- UK divi income free of IT
- overseas divi income subject to irrecoverable withholding tax
- can withdraw up to 5% of orig investment each year without having to pay tax
- if PH was non UK res for life of pol, gain is reduced by fraction equal to period of non residency
- for UK res, all gains (inc, divi, growth) are taxed as income when tax becomes due
when chargeable event occurs (DAMES) - IT becomes liable on any gains and income - allows tax to be deferred
Tax efficient investment for non dom
Business investment relief
income and gains can be remitted to UK by non doms without giving rise to tax charge if invested in an EIS company within 45 days
OR if you invest in EIS up to 1yr before can claim retrospectively
Must take offshore within 45 days of sale
Same relief as UK investor - gains can remain onshore tax frere
Types of domicile (4)
DOMI OF ORIGIN
- acquired @ birth usually from father, take mothers if father dies or born out of wedlock
DOMI OF CHOICE
- move to new cunch with intention of living permanently - no strict rules for acquiring domi change but factors include citizenship, will, jobs etc
DEEMED DOMI
- resi in UK for 15/20 last tax years
- if leave UK and stop being resi - lose deemed domi status after 3y for IHT and CGT purps
DOMI OF DEPENDENCY
- prior to 1974 married women acquired domi of husband
UK dom/deemed dom = liable for IHT on worldwide assets
non UK dom = only liable to IHT on UK assets
concept of domicile to be abolished next tax year under current spring budget
Remittance basis
For res non dom or resi but not tax resi
Non dom indivs can claim remittance basis (as opposed to usual arising basis) where
- UK tax paid only on income/gains earns abroad when they are brought into UK
- UK income/gains still taxed on arising basis (including if inc is from UK comp)
GIVEN
- without charge and claim if unremitted inc/gains <2k or for minors (only time allowances are kept)
- with claim but without charge if res in UK <7/prev 9 tex years
-with claim + 30k pa if resi for >7/9 last TY
- with claim and 60k charge pa is resi for 12/14 prev years
LOSE BOTH INCOME TAX PERSONAL ALLOWANCE AND ANNUAL CGT ALLOWANCE IF CLAIMED
UK resi and dom tax
UK tax on arising basis on global inc/gains
If taxed on foreign income/gains locally - still liable for UK tax and must declare but relief of given in UK for foreign tax paid under double taxation agreements
Tax rates
savings rate band of 5k applies where NSI <17570/ taxable inc below 5k (in addition to savings allowance)
Get 5000 - whatever taxable NSI income you earn (inc over 12570)
12570 PA
>50270 = higher rate
>125140 = ART (no PA at this amount)
Lose £1 PA for every £2 over £100k
Personal savings allowance = 1k BR, 500 HR, 0 ART = uses up BR band
Divi allowance £500 = uses up basic rate band
Property and trading allowances - e.g. vinted
Can earn <£1k @ source without declaring (must keep records)
If income >£1k - must declare and then pay tax. can either use allowance and dedut 1k or deduct allowable expenses (and do IT regularly which is usually more beneficial)
Cant use for income under rent a room scheme = as you can earn already 7.5k tax free if there is shared living space and no self contained annex
Adjusted net income
All income w/out removing any allowances
- trading loss relief
- gross pension contributions
- donations made via giftaid (grossed up @ basic rate)
- pension contributions paid gross (deducted pre tax from salary)
- pension contributions where provider has given tax relief @ basic rate
- dont include gains
ANI determines entitlement to personal savings allowance an interest allowance
Tax calcs for pension contributions
Gross contribution (PAYE)
- deduct contribution from ANI (to assess bands)
- deduct contribution from NSI
- tax as usual
Net contributions
- gross contribution up @ BR
- deduct grossed up contribution from ANI
- expand basic rate band by grossed up contribution and tax as usual
Marriage allowance
Avail for married couples and civil partners
- allows you to transfer some of your personal allowance to husand/wife/partner
- can transfer up to 1260 of PA - reduces their tax by up to 252
- transfer from non tax payer to tax payer
- receiver must be BR taxpayer
- married couples allowance - if born before 1935 - more beneficial tax reducer @ 10% of 11080 max
- income limit is 37k, MCA reduced by /31 for every £2 of income above this.
- MCA min is £4280
- cant use both
Mortgage interest relief
prior to 17/18
- taxpayers could deduct mortgage interest from from rents received when calculating taxable income
phased out 20/21
- now relief paid out as tax credit on lower of 20% of
- finance costs
- property bis costs
- adjusted total income
Tax reliefs
ELIGIBLE INTEREST
- tax relief on gross interest paid on loans for
- to purchase commercially let prop, buy shares/make loan to closely held comp, pay IHT, buy interest in partnership, coop, buy shares in employee controlled comp
- relief @ marginal rate, deducted from income to reduce taxable income
GIFTS TO CHARITY
- giftaid scheme applies to any gifts made to registered charity, assumed made net of BR
PAYROLL GIFTING
- GAYE - auto relief @ marginal rate, deducted from gross salary
GIFTS OF SHARES/SECS TO CHARITY
- listed shares, can deduct cost of shares + costs + claim @ marginal rate
DOUBLE TAXATION RELIEF
- protects indivs from being taxed twice on same income
UNILATERAL/CREDIT RELIEF
- where no DTA, credit relief applies instead - DTR on source by source basis @ lower of overseas tax or UK tax
WITHOLDING TAX
- deducted in gov by one country when inc earned in that cunch is paid to someone overseas
MAINTENENCE PAYMENTS
- when mandated by court, paid gross when 1/both parties born before 1935
ISA TYPES
ISA = tax efficient savings/investments
STOCKS AND SHARES - 18y
- corp/gov bonds, UK listed ITs, life assurance prods, AIM shares and listed shares, UK auth unit trusts and OEICS, shares acquired via employee stock plan in past 90 days even if not listed
FLEXI ISAs
- money can be wtihdrawn and replaced in same tax year (not JISAs)
CASH- 16y
- cash on deposit with building society/bank + some NSI prods
H2B
- now closed to new savers, 25% gov contribution up to 3k on 12k investor contribution
- must invest 200pcm with initial 1.2k
- house price 250k, 450k London
LISA - 18 - 40
- 25% gov bonus max investment 4kpa,
- proceeds used for first home 450k house London or >60yrs/terminally ill
- 25% penalty for early withdrawl
INNOVATIVE FINANCE >18y
- P2P loans and cash investments, must be facilitated by FSMA auth operatory
JISA
- LT saving for children, 9k sub limit
What is a VCT vs EIS vs SEIS
VCT
- enables investment into small/high risk trading comps w/ unlisted shares
- VCT itself listed on XC (nav, prem, disc)
- VCT exempt from corp tax on disposal of investments once approves by HMRC
- tax reliefs to encourage investors to provide capital to start ups
EIS
- designed to help smaller, higher risk trading comps
- investor tax reliefs encourage
- comps must meet criteria to issue shares under scheme
-investor must not be connected to comp when subscribing
- shares not redeemable fro >3y
SEIS
- smaller, riskier, earlier stage
- investors cannot have >30% stake
- can issue shares via EIS or receive VCT investment if they have spent >70% of SEIS money
- cannot issue via SEIS if already done VCT/EIS
Rules for issuing company VCT, EIS, SEIS
None for VCT as it’s a trust
EIS
- unlisted with no listing arrangements (AIM allowed)
- qualifying trade = hotels, prop development, nursing homes, farming, legal/FS excluded
- gross assets <15m before issuing
- <250 full time employees
SEIS
- UK bases
- <25 employees
- <250k gross assets
- <3y old
- same quali trade
- not raised >250k via SEIS previously
Income tax relief on contributions VCT, EIS, SEIS
VCT
- 30k% up to max contribution of 200k pa as tax reducer
- cannot be carried back unlike EIS/SEIS
- must hold shares >5y for relief (gifting, death is allowed)
EIS
- 30% up to max contribution of 1m, extra 1m for knowledge intensive comps as tax reducer
- can be carried back
- must hold >3y
SEIS
-50% up to max contribution of 200k as tax reducer
- can be carried back
- must holder >3y
CGT on VCT, EIS, SEIS
VCT
- no CGT on gains @ sale (limited to purchases <200k shares/year)
- losses not allowable
- no min holding period
EIS/SEIS
- no CGT if held >3y (SEIS 50% of gain immediately tax exempt)
- losses allowable where income tax relief or CGT deferral relief has been obtained - can set against income or other CGT
CGT deferral relief VST, EIS, SEIS
VCT
- no deferral relief
EIS/SEIS
- gains can be deferred by investing into new EIS/SEIS eligible shares (-1y to 3y after gain) - gain charged when shares disposed of unless reinvested into another deferral scheme
- SEIS = 50% of reinvested gain automatically exempt from CGT
- no limit on reinvestment amount
IHT business relief VCT/EIS/SEIS
None for VCT
EIS/SEIS
- qualify for 100% business relief if owned for >2y
Business Relief reduces the value of a business or its assets when working out how much Inheritance Tax has to be paid
Share scheme options
Sharesave
- buy from gross salary
- employee contributes on monthly basis then £ used to purchase shares in future under option guaranteed price linked to current SP (not <50% current MV)
- if employee transfers to ISA within 90 days then gains tax free
Company share option plans
- comp sets option price for future date of current MV
- CGT on disposal
- buy from gross salary
- no tax charge on exercise
- pay market rate, no option discount
CGT calc process
- determine disposal proceeds (consideration - costs)
- deduct acquisition costs other costs incurred (e..g capex, for income tax can remove maintenance costs)
- set off allowable losses
- deduct annual exemption
- calc tax @ marginal rate
Losses and gains in same year must be netted off + allowance used
3k allowance doesnt used up bands - just deduct it from gain
Carried forward loss doesnt HAVE to be netted off - can continue to carry forward
How to calc acquisition costs for CGT
identification rules where holding built up over time
- match w/ any purchases on same day
- match w/ any purchases in following 30 days from date of sale
- use avg share price of remaining pool of shares
CGT exempt and and non exempt assets
EXEMPT
-main home
- gilts
- NSI certs, premium bonds
- spousal gifts
- EIS, VCT, SEIS if held for quali period
-qualifying corp bonds (£ denom, not capable of conversion and not deeply discounted)
- private cars
-personal injury comp
- wasting chattels (Economic lif e<50 yrs)
- jewellery, antiques, personal items <6k
- gambling proceeds
- NS&I
- spread betting
- currency for personal use (not traders)
CHARGEABLE
- crypto
-shares/OEICs/trusts/unit trusts
- land and buildings
- higher val jewellery and paintings
- intangible assets eg. goodwill
CGT reliefs - Business asset disposal/entrepreneur’s relief
- avail on diposal of quali business assets
- 10% rate on gains w/ £1m gains lifetime limit
- any gains >£1m = 10/20% as usual
Quali asset =
disposal of all/part of trading bis
disposal of secs/shares in trading comp where you work and own >5%
- must own >2y before sale
Chattels CGT Alternative basis of assessment
Bought for 2k and sold for 8k
= Diff between sale proceeds and exemption amount (6k) x by 5/3
=gain - then can put 3k exemption against this (tax at 10% or 20%)
For chattels between 6k and 15k
= 8k -6k x 5/3
= 3.3k gain
£300 taxable
Calc this was or the normal way and then pick the lowest
Business rollover relief
Form of CGT deferral
avail to comps and indivs
Allows gain on disposal of quali assets to be deferred if proceeds reinvested into new quali trading assets
Deferred gain deducted from cost of new assets, chargeable on disposal of replacement asset subject to possible further rollover claims
1yr before or 3 yrs after disposal
Quali assets
- land/buildings used for trade
-fixed plant and machinery
-goodwill
-satellites, space stations, spacecraft
-milk, potato, cow, premium quotas
Holdover relief
Gift of asset normally treated as charged disposal for CGT purps
- CGT on donor
Gift relief allows doner to transfer gain to recipient - tax arises when recipient sells assets
- done by reducing MV at which recipient recieves asset
- acquisition cost of gift reduced by amount of held over gain = CGT passed to receiver
EITHER
Quali business asset
- used in trade/profession
-quoted shares in personal trading comp (where indiv owns >5% of voting rights)
- unquoted shares in trading comp
-AIM shares
- Requires joint election from donor and donee
OR
-gift into disc trust or into interest in possession lifetime settlement (both CLTs)
- doesnt require joint election
Ways to reduce CGT bll
- annual exemptions
- ISA contributions
- EIS investments - £1m pa (£2m knowledge intensive comp), CGT deferral into EIS investment
- SEIS £200k pa investment, CGT deferral, 50% of gain auto exempt
- marriage to benefit from spousal transger
- utilise losses carried forward
- charity gift holdover relief
- gift holdover relief if given to disc trust or IIP settlement
4 types of transfer IHT purposes
Exempt
Potentially exempt (PET)
Chargeable lifetime transfer (CLT)
Chargeable transfers on death
(immediately) Exempt transfers
LIFETIME ONLY
- small gifts <250
- annual 3k exemption, can carry fwrd 1y
-regular gifts out of income (must be reg and out of taxed income, no max limit)
- transfer of unused NRB between spouses
- inter spouse gifts (325k lifetime limit when gifting to non dom spouse)
- gifts on marriage (5k per parent, 2k per grandparent, 1k from others, 5k inter fiance)
LIFE OR DEATH
-gifts for national benefit (charity, museum, local authority)
- gifts to charities and qualifying political parties (indivs who leave >10% baseline estate to charity pay IHT @ 36% not 40%)
PETs
Most lifetime gifts are PETs = become fully exempt if donor survives 7 yrs
- transfers where donee is clearly identifiable
- on death: chargeable @ death rates if over NRB if donor doesn’t survive 7y
- tapered if death occurs between 3-7y
-bare trusts or trust for disable people can receive PETs, other transfers to trusts are CLTs
If CLT to trust made >7ys before death - can effect amount of tax paid later for failed PET and CLT. any chargeable transfers >7yrs before gift reduce NRB for gift being assessed
ONLY TAPER TAX ON THE GIFT NOT THE GIFT ITSELF = IF GIFT IS IN NRB THEN NO TAPERING
IHT valuations
Property = market price it could except to achieve if sold time of transfer
Quoted shares = lower of 1/4 up rule or marked bargAin price
1/4 up rule = closing bid price + 1/4 of B/O spread
Marked bargain =avg of highest and lowest marked bargains on day excluding those marked @ special prices
Unit trusts = @ manager bid price
OEICS = single priced so val price
Unquoted shares = no easily identifiable open market val, must negotiate with val division of HMRC
NRB IHT
NRB = 325k
If estate <325k = no IHT due
>325k = tax @20% for CLT (e.g. into some trusts)
>325k tax @ 40% for transfers on or within 7y of death (subj to taper benefit)
Residence NRB = £175k - when resi is passed to direct descendant (children, grandchildren etc)
If estate >2m, RNRB reduced by £1 for ever £2 over limit (estate value after funeral but before removal of allowances,NRB etc)
Ways to reduce IHT bill
- Increase gift to charity to >10% of baseline estate to tax @ 36%
- reduce value of estate to <2m to reinstate RNRB (only if prop going to direct descents or spouse)
- Utilise small gifts exemptions of £250 pa (40% tax saving)
- Utilise annual gift allowance of £3k pa + £3k carried forward(40% tax saving)
- marriage gift allowance
- Regular gifts out of surplus income (40% tax saving)
- Transfer of shares to charity (avoids CGCT and IHT)
- AIM portfolio (40% saving after 2y)
- Marriage/civil partnership for spousal benefi
- Insurance policy written in trust to pay IHT bill
- EIS investment = IHT exempt after 2y + CGT deferral + IT reducer of 30% of investment amount
- business property relief
- IHT loss relief
Chargeable Lifetime Transfers
CLTs
-discretionary trusts or interest in possession lifetime settlements
- not exempt or potentially exempt
- most commonly transfers to trusts (other than bare trusts or trusts to disabled person)
- tax @20% due immediately on excess of NRB
- same taper table as for PETs applies - tax paid upfront can be offset
- if donor dies >5ys after no additional tax due because of taper relief
Gifts with reservation of benefiit
Incomplete lifetime gift where donor continues to enjoy gifted asset (e.g. gift of home but continues to live there rent free)
- treated as transfer (CLT/PET as appropriate) at the time but never leaves estate
- very tax inefficient
- not treated as with reservation if full £ for occupation/enjoyment of asset is paid @ market rate
Preowned assets tax charge
Inc tax applied to indivs that benefit from free/low cost use of asset they used to own
- to counter schemes that avoid IHT with gifts of reservation
- no charge if value of benefit <5k/year
IHT transfer of NRB
- any unused NRB can be transferred to estate of surviving spouse (must have been married or civil partnership @ time of death) - after 7y cumulation and chargeable estate
- must be claimed on second death
- % of unused NRB transferred not £ amount ( 4dp - dont round up or down)
Reduced rate for charitable giving
If 10+% of baseline estate is given to charity - IHT reduced to 36%
Baseline estate = amount after deducting avail reliefs and NRB but before RNRB and charity relief
Also applies to any CLTs and failed PETS
Successive charges relief
- where you receive money on which IHT has been paid then die within 5y = relief on IHT due
- asset subject to IHT twice in quick succession (5y before 2nd death)
<1 y = 100% relief
1-2 = 80%
2-3 = 60%
3-4 = 40%
4-5= 20%
>5 = 0%
On second death IHT in normal way then cal relief as
(Tax paid on first transfer * net transfer/gross transfer) x relevant percentage of relief
deduct this from IHT on second death
Business relief
Relief for transfers of business prop designed to ensure family bis not crippled by IHT
100% relief
- interests in unincorporated businesses (w/out separate legal personality)
- shareholdings any size in unquoted/AIM
50% relief
- controlling shareholdings in fully listed comps
- land/buildings/plant/machinery used wholly/mainly for purpose of bis controlled by donor
Cannot be claimed for assets that
- also quali for APR
- were not used mainly for bis is 2y prior to tranfer
- not needed for future bis sue
- subject to binding contract for sale @ time of transfer
Agricultural property relief (APR)
includes land, crops, and buildings not animals or equip (things stuck to ground only)
100% relief
- owner occupied farms
- land let on grazing licence
- property let on tenancy after sep 95
50%
- interests of landlords in let farmland
property must be owned and occupied by donor for agric purposes in prev 2 yr
IHT transfer on death calc steps
Deed of variation
Legal doc that can be used to change distro of estate as set out in will or under laws of intestacy
- equalising distro of estate as set out in the will or clearing up uncertainties
- making provisions for someone who doesnt benefit (e.g. grandchild born after will was made, or someone who laws of intestacy doesnt cover e.g. stepchild)
- intergenerational planning e.g. passing assets to grandchildren rather than children
- tax planning - e.g. will not written in most tax efficient way, gifting to charity to reduce IHT, moving assets into turst
- those giving away interest in estate must be >18 and of sound mind
-Deed must be signed by anyone giving away anything - no consideration can be paid for completing the deed
- deed must be completed within 2y of death
Not a CLT or PEt - just as if this was originally written in will
National insurance + contributions
UK tax system to fund state benefits e.g. state pension, healthcare, jobseekers allowance etc
Stamp duty
Tax paid on stocks bought with stock transfer form
- paper based transactions between investors
- payable on certificated shares
- stock transfer form must be stamped by HMRC
- >1k in value
- tax @ 0.5% of value rounded UP to nearest £5
- usually not levied on off market purchases
- tax levied on purchaser
SDRT
Tax of paperless purchase of shares
- on dematerialized secs
- 0.5% rounded to nearest penny
- usually levied via CREST
- can include UK/foreign shares, convertible loan stock, options
- levied on purchaser
SDRT/stamp duty exempt secs
gilts
bonds (not convertibles)
CFDs
ADRs
unit trusts + OEICs (when units/shares sold manager pays SDRT to HMRC which is passed on via management charges
ETFs
most AIM shares
renounceable letters of allotment
other rights which are renounceable
non sterling stock
SDRT/stamp duty exempt transactions
gifts
purchases made by registered charities
purchases by LSE member firms with intermediary status
clearing houses
transfers between trustees
transfers to spouse on marriage/divorce
transfers to SH on wind up
derivs if UL is exempt
repurchases and stock lending
SDLT
pay SDLT when you buy houses, flats and other land and buildings over a certain price in the UK
Reliefs and exemptions
- property transfers where no £ changes hands
- property left in a will
- divorce/dissolution of civil partnership
- freehold purchases < 40
1st time buyer SDLT
<450k = 0%
425k - 625k = 5%
> 625 = standard rates no relief claimable on anything
VAT
Tax charged on most goods/servs that VAT registered bis supply in UK
Also charged on most imported goods/servs
Businesses add VAT to price the charge to cover costs
- based on taxable supplies
- > 90kturnover must register for VAT
VAT rates
standard rate = 20%
reduced rate = 5%
- some goods/servs = domestic fuel/power
exempt supplies = education and training, insurance
zero rated 0%= food, childrens shoes and clothes
zero rated = taxable supplies so much register and can reclaim VAT on expenses
exempt = dont have to register with HMRC but cannot reclaim on expense
Investment VAT
Manager fees - generally VATable
- financil advisor/planning fees
- investment management fees
- includes AMC, initial and per charges
- discretionary, segregated
-safe custody
- advisory, research and valuation service
- registrar services
Investment instruments = exempt
- shares, bonds, loans, debentures etc
Pooled/collective fund management = Exempt
- OEICs, unit trusts, ITc, MPS
- pooled funds/insurance wrappers
- management fee is VAT exempt
EXEMPT
- nominee services
- global custody
- underwriting services
- stock lending
Corporation tax
Charge to profits on income and chargeable gains
25% when profits >250k
small bis rate = 19% profits <50k
marginal relief for profits up to 50k
(19% <50k, 26.5% 50k - 250k)
Accounting periods are time apportioned over tax year if rate changes
Trading losses can be offset
Must be paid within 9m of period end
returns are due withn 12m of end of accounting period
Tax avoidance vs evasion
Avoid = prudent, legal, use of legitimate methods to pay least amount of tax
Evade = illegal, failure to provide full and accurate info to relevant taxing authorities
